From Briefing.com: 4:13 pm Microsoft beats by $0.11, beats on revs; guides on the call (MSFT) : Reports Q4 (Jun) earnings of $0.69 per share, $0.11 better than the Capital IQ Consensus of $0.58;
non-GAAP revenues rose 2.1% year/year to $22.64 bln vs the $22.14 bln Capital IQ Consensus.
The current quarter effective tax rate reflected a favorable mix of our income between the U.S. and foreign countries, as well as benefits associated with distributions from foreign affiliates. As such, the non-GAAP tax rate was 15%.
Revenue in Productivity and Business Processes grew 5% (up 8% ex-FX) to $7.0 bln vs. $6.5-6.7 bln guidance: Office commercial products and cloud services revenue grew 5% (up 9% ex-FX) driven by Office 365 commercial revenue growth of 54% (up 59% ex-FX)
Office consumer products and cloud services revenue grew 19% (up 18% ex-FX) with Office 365 consumer subscribers increasing to 23.1 mln Dynamics products and cloud services revenue grew 6% (up 7% ex-FX) with Dynamics CRM Online paid seats growing more than 2.5x year-over-year Revenue in Intelligent Cloud grew 7% (up 10% ex-FX) to $6.7 bln vs. $6.5-6.7 bln guidance:
Server products and cloud services revenue increased 5% (up 8% ex-FX) driven by double-digit annuity revenue growth Azure revenue grew 102% (up 108% ex-FX) with Azure compute usage more than doubling year-over-year Enterprise Mobility customers nearly doubled year-over-year to over 33,000, and the installed base grew nearly 2.5x year-over-year Revenue in More Personal Computing declined 4% (down 2% ex-FX) to $8.9 bln vs. $8.7-9.0 bln guidance:
Windows OEM non-Pro revenue grew 27% (up 27% ex-FX), outpacing the consumer PC market, and Windows OEM Pro revenue grew 2% (up 2% ex-FX)
Surface revenue increased 9% (up 9% ex-FX) driven by Surface Pro 4 and Surface Book
Phone revenue declined 71% (down 70% ex-FX)
Xbox Live monthly active users grew 33% year-over-year to 49 mln
Search advertising revenue excluding traffic acquisition costs grew 16% (up 17% ex-FX) with continued benefit from Windows 10 usage.
Microsoft returned $6.4 bln to shareholders in the form of share repurchases and dividends.
4:11 pm Exponent misses by $0.05, misses on revs, guides for 1-2% FY16 revenue growth before reimbursements (EXPO) :
Reports Q2 (Jun) earnings of $0.38 per share, including a modest tax benefit, $0.05 worse than the Capital IQ Consensus of $0.43; revenues before reimbursements fell 2.6% year/year to $73.33 mln vs the $77.96 mln Capital IQ Consensus.
FY16 Guidance
Revenues before reimbursements are expected to be down 1% to 2% for the year as compared to 2015. Underlying growth is expected to be in the low single digits, excluding the impact of the major project completion in the third quarter of 2015. 2016 EBITDA margin is expected to decline ~200 to 250 basis points as compared to 2015, as a result of lower utilization.
4:10 pm Marvell beats by $0.02, misses on revs (MRVL) :
Reports Q4 (Jan) earnings of $0.11 per share, $0.02 better than the Capital IQ Consensus of $0.09; revenues fell 28.2% year/year to $616 mln vs the $652.43 mln Capital IQ Consensus.
Non-GAAP gross margin percentage for 4Q16 was 51.9%, compared to 46.0% for 3Q16 and 51.8% for 4Q15.
Cash flow from operations for 4Q16 was $53 mln, compared to $67 mln in 3Q16 and $155 mln reported in4Q15.
MRVL made no share repurchases in 4Q16. In FY16, under the company's authorized share repurchase program, MRVL repurchased approximately 19.7 mln shares for about $261 mln. The remaining authorized amount for share repurchases at the end of FY16 was approximately $183 mln.
4:20 pm : The stock market ended the Tuesday affair on a mixed note, responding to a lukewarm batch of earnings reports and a negative bias in global bourses. Today's trade also featured a downturn in oil futures, strengthening in the dollar, and weakness from the heavily-weighted consumer discretionary (-0.2%) and health care (-0.2%) sectors. The Nasdaq Composite (-0.4%) finished behind the S&P 500 (-0.1%) and the Dow Jones Industrial Average (+0.1%).
Equity indices began the day on a lower note as global markets tilted to the downside. European indices led the losses as disappointing earnings results and a below-consensus reading of Germany's July ZEW Economic Sentiment Survey (-6.8; consensus: 9.0) weighed. Additionally, the International Monetary Fund added to the negative tone when it cut the United Kingdom's 2016 projected growth rate to 1.7% (from 1.9%). The organization also trimmed its global growth estimate for the year to 3.4% (from 3.5%).
The benchmark index gapped down at the start of the session, notching a morning low near the 2160 price level. Sellers were unable to press equities much farther as investors looked to the remainder of a busy earnings week. The major averages ticked off their lows in the final hour while eight sectors finished in the red. The materials (-0.7%), energy (-0.6%), and telecom services (-0.4%) sectors led the losses while the remaining decliners finished with losses between 0.1% (technology) and 0.2% (consumer discretionary).The heavyweight financial (+0.1%) and industrial (+0.1%) groups ended with the only gains.
The energy space (-0.5%) displayed relative weakness as the group responded to a leg lower in oil futures. August crude ended its day lower by 1.5% ($44.67/bbl; -$0.68), extending its July decline to 7.4%. In the sector, oilfield service names underperformed as Halliburton (HAL 44.99, -0.62) and Baker Hughes (BHI 45.74, -1.12) declined by 1.4% and 2.4%, respectively. Halliburton is scheduled to release its quarterly report tomorrow morning.
The countercyclical health care group (-0.2%) underperformed as health care service providers weighed. In the group, Aetna (AET 115.15, -3.21) and Humana (HUM 153.38, -6.26) lost a respective 2.7% and 3.9% after reports indicated that the government may seek to block their proposed merger. The same reports signaled that similar actions might be taken regarding the potential Anthem (ANTM 132.06, -2.94) and Cigna (CI 130.30, -2.83) deal. On the flipside, Dow component Johnson & Johnson (JNJ 125.25, +2.11) ended at the top of the price-weighted index.
In the consumer discretionary space (-0.2%), Netflix (NFLX 85.84, -12.97) tumbled 13.1% after subscriber growth for the second quarter missed analysts' estimates. The company also lowered its outlook for net subscribers in the coming quarter. Separately, restaurant names outperformed as Chipotle Mexican Grill (CMG 415.31, +6.41) and McDonald's (MCD 126.50, +2.70) gained 1.6% and 2.2%, respectively.
The technology space (-0.1%) finished its day in-line with the benchmark index as Oracle (ORCL 41.08, -0.56) and Microsoft (MSFT 53.09, -0.87) weighed on the group. Microsoft sank 1.6% ahead of this evening's quarterly report. Conversely, Yahoo! (YHOO 38.17, +0.22) gained 0.6% after it was reported that five bidders have presented final-round offers for the web portal.
The U.S. Dollar Index (97.05, +0.48) ended broadly higher as the euro and the pound each lose ground to the greenback. The single currency ticked lower by 0.5% against the dollar (1.1019) while sterling slipped 1.2% against the buck (1.3095). Separately, the dollar gained 0.7% against the commodity-sensitive Canadian dollar (1.3028).
The Treasury complex settled near its session high as the yield on the 10-yr note slipped three basis points to 1.56%.
Today's trading volume was below the recent average as fewer than 736 million shares changed hands on the NYSE floor.
Today's economic data was limited to Housing Starts and Building Permits for June:
Housing starts jumped 4.8% to a seasonally adjusted annual rate of 1.189 million units (Briefing.com consensus 1.165 million) in June on the heels of a downwardly revised 1.135 million (from 1.164 million) in May.
Building permits increased to a seasonally adjusted annual rate of 1.153 million (Briefing.com consensus 1.150 million) while the prior month saw a small downward revision to 1.136 million from 1.138 million.
By and large, then, the starts and permits data for June were largely as expected when factoring for the downward revisions to May.
The trouble there is that neither starts nor permits have exhibited any real growth in recent months.
With the latest report, the three-month moving average for starts stands at 1.160 million versus 1.167 million in February.
The three-month moving average for permits rests at 1.140 million versus 1.184 million in February.
The improvement in starts in June was fueled by a 4.4% pickup in single-family starts and a 5.4% increase in multi-unit starts.
The Northeast was the main driver of the improvement in single-family starts, logging a 31.6% increase.
Single-family starts, though, were up in all regions, including a 7.3% gain in the Midwest, a 3.1% increase in the West, and a 0.5% uptick in the South.
Permits for single-family units increased 1.0% and were up 2.5% for multi-unit dwellings.
The Northeast again led the way, with permits up 13.7% for single-family units; however, the West was the only other region to show a gain in single-family permits (+0.6%).
The Midwest was flat and the South was down 0.3%.
The number of units under construction at the end of the period was 1.015 million, up slightly from 1.013 million in May.
That left the second quarter average for units under construction at 1.008 million versus 985,000 in the first quarter.
The higher second quarter average will factor favorably in the residential investment component for second quarter GDP.
Tomorrow's economic data will be limited to the 7:00 ET release of the weekly MBA Mortgage Index. DJ30 +25.96 NASDAQ -19.41 SP500 -3.11 NASDAQ Adv/Vol/Dec 989/1.533 bln/1860 NYSE Adv/Vol/Dec 1222/735.9 mln/1744
3:30 pm :
The dollar index is up +0.5% around the 97.06 level, weighing on commodities overall
Commodities, as measured by the Bloomberg Commodity Index, are down -0.9% at the 85.75 level
Crude oil extends yesterday's losses, closing near session lows ahead of tonight's API data
August crude oil futures fell $0.68 (-1.5%) to $44.67/barrel
EIA petroleum data will be released tomorrow at 10:30 am ET
API data will be released today at 4:30 pm ET
Baker Hughes rig count data will be released Friday at 1 pm ET
Natural gas finishes afternoon pit trading near parity with the close of the previous session after a notable drop in the previous session
August natural gas closed $0.01 higher (+0.4%) at $2.73/MMBtu
In precious metals, gold stages a modest afternoon rally, consolidating near its afternoon highs despite notable strength in the dollar index
August gold ended today's session up $3.20 (+0.2%) to $1332.50/oz
Silver sees losses for the second session in a row as the dollar index holds onto this morning's gains
September silver closed today's session $0.06 lower (-0.3%) at $20.01/oz
Base metal copper inches up to close higher for the second consecutive session in afternoon pit trading
September copper closed $0.02 higher (+0.9%) at $2.26/lb
The major averages began the day under modest selling pressure, responding to a downturn in European averages and a leg lower in oil futures. European indices pulled back amid a batch of corporate earnings following an impressive run. The Euro Stoxx 50 (-0.61%) has rebounded 5.7% since Britain's decision to leave the European Union. Participants also weighed the recent decision by the IMF to lower its global growth estimate to 3.4% for 2016 (from 3.5%) and its decision to lower the United Kingdom's projected growth rate to 1.7% (from 1.9%).
Market data on Tuesday came in the form of housing starts which jumped 4.8% to a seasonally adjusted annual rate of 1.189 million units in June on the heels of a downwardly revised 1.135 million (from 1.164 million) in May. Additionally, building permits increased to a seasonally adjusted annual rate of 1.153 million while the prior month saw a small downward revision to 1.136 million from 1.138 million.
Broader market trading closed Tuesday mixed, but a slight advance as the bell tolled took all three slightly higher. Action was led higher by the Dow Jones Industrial Average which added 25.96 points (+0.14%) to 18559.01, this all while August crude oil futures fell $0.68 (-1.5%) to $44.67/barrel. The worst performer today was the Nasdaq Composite which lost 19.41 points (-0.38%) to 5036.37; perhaps expediting the decline, Nasdaq 100 component Netflix (NFLX 85.84, -12.97 -13.13%) reported mixed results and soft subscriber numbers and guidance. The S&P 500 finished in the middle, albeit lower by 3.11 points (-0.14%) to 2163.78.
Also snapping a recent winning streak, the Technology (XLK 45.25, -0.06 -0.13%) sector closed the day at about the middle of the range as component F5 Networks (FFIV 120.60, +4.78 +4.13%) out-performed on reports the company could be a potential Thoma Bravo takeout target. Other sectors as measured by the S&P closed the day IYZ -0.93%, XLB -0.59%, XLE -0.56%, XLV -0.22%, XLY -0.18%, XLU -0.17%, XLP -0.07%, XLF +0.04%, XLI +0.05% with US Telecoms posting the weakest session and Industrials managing to hold off the selling.
In the S&P 500 Information Technology (746.60, -0.88 -0.12%) sector, the session was in the red for all but a few moments toward the start of the day as components IBM (IBM 159.58, -0.28 -0.18%), EMC (EMC 28.11, +0.57 +2.07%) and Yahoo! (YHOO 38.17, +0.22 +0.58%) all reported quarterly results last night; the three ended Tuesday traded split. Other names in the space which closed lower included EA -2.25%, WDC -1.77%, XRX -1.54%, ATVI -1.47%, ORCL -1.34%, AVGO -1.11%, MU -0.90%, APH -0.86%.
Other notable news items among sector components:
CSC (CSC 48.22, -0.41 -0.84%) and IBM (IBM) announced a collaboration in which IBM will provide its Cloud Managed Services for z Systems -- IBM Cloud for z -- and associated mainframe hardware, software, monitoring and governance support to CSC clients who are moving to the cloud and want a more secure, scalable, flexible information technology infrastructure at significantly reduced operational costs.
Western Digital (WDC 51.20, -0.92 -1.77%) announced that its G-Technology product lines are getting more capacity and increased performance to keep up with the growing needs of creative professionals and consumers capturing vast amounts of high-resolution content, including video and digital photography.
Accenture (ACN 113.37, -0.77 -0.67%) acquired MOBGEN, an end-to-end digital services company that combines mobility strategy, creativity and technology to deliver solutions that drive engagement for global brands with their customers, employees and partners. Financial terms of the deal were not disclosed.
EMC (EMC) announced that, based on a preliminary vote tally from the Special Meeting of Shareholders held earlier today, EMC shareholders approved the merger agreement among Denali Holding Inc., Dell Inc., Universal Acquisition Co., and EMC, and approved the other two proposals described in EMC's proxy statement relating to today's meeting.
Yahoo! (YHOO) modestly out-performed today on the back earnings and reports that suggested as many as 5 bidders and as few as 3 could be vying for the company's core business.
According to the NYPost, F5 Networks (FFIV) could be a potential Thoma Bravo takeout target.
Elsewhere in the tech sector:
Silver Spring Networks (SSNI 12.52, -0.02 -0.16%) appointed Ayse Ildeniz as COO and named Donald Reeves III as Chief Technology Officer.
Science Applications (SAIC 59.41, +0.29 +0.49%) was awarded a $41.46 million DoD contract for the establishment of a total supply chain management initiative supporting various classes of spare parts.
Orange Digital Ventures (ORAN 15.72, -0.24 -1.50%) announced its participation in PayJoy. This investment comes as part of PayJoy's Series A-funding round alongside several VCs including Union Square Ventures (USV), Draper Nexus Ventures, Fenway Summer Ventures, Core Innovation Capital, among others.
Qlik Tech's (QLIK 29.96, +0.07 +0.23%) pending acquisition by Thoma Bravo was cleared by the EU.
In reaction to quarterly results:
IBM (IBM) reported better than expected Q2 EPS on revenues which came in in-line with expectations and fell 2.8% versus last year at $20.24 billion. IBM reaffirmed guidance for FY16, sees EPS of "at least $13.50.' IBM also reaffirmed previously provided free cash flow guidance.
Netflix (NFLX) reported better than expected Q2 EPS of $0.09 on worse than expected revenues which rose 19.5% versus last year to $1.97 billion. NFLX guided Q3 EPS of $0.05, worse than market expectations. Additionally, NFLX's Q2 domestic net additions were 0.16 million vs 0.50 million guidance. Further, NFLX gave Q3 guidance for domestic net adds of 0.30 million, expectations were in the 0.75-0.80 million range. Also, NFLX's Q2 international net additions were 1.52 million vs 2.00 million guidance. Also, for Q3 NFLX expects additions of 2 million vs expectations in the range of 2.70-2.85 million.
VMware (VMW 68.23, +5.66 +9.05%) reported better than expected Q2 EPS of $0.97 on in-line revenues which rose 11.3% versus last year to $1.69 billion. Further, management guided on the conference call for Q3 total revenues of $1.738-1.788 billion on non-GAAP EPS expectations of $1.08-1.11. For FY16, the company sees total revenues of $6.95-7.05 billion on non-GAAP EPS expectations of $4.27-4.33.
EMC (EMC) reported better than expected Q2 EPS of $0.45 on in-line revenues which rose 0.3% versus last year to $6.02 billion.
Ericsson (ERIC 7.08, -0.46 -6.10%) reported worse than expected EPS and revenues for Q2 of SEK0.83 and SEK 54.11 billion, respectively.
Wipro (WIT 11.04, -0.81 -6.84%) reported worse than expected Q1 EPS and revenues of INR 8.33 and INR 135.99 billion.
Yahoo! (YHOO) reported worse than expected Q2 EPS of $0.09 on in-line revenues which fell 19.3% versus last year to $842 million. Further, YHOO sees Q3 revenues ex-TAC $840-880 million and EBITDA of $190-220 million. The company also reaffirmed FY16 revenues guidance of $3.4-3.6 billion and adj. EBITDA of $700-800 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: MANH, MRVL, MSFT/APH, ASML, TEL
Analyst actions:
STX was upgraded to Neutral from Sell at Citigroup,
PSTG was upgraded to Neutral from Negative at Susquehanna,
AUO and LPL were upgraded to Buy from Neutral BofA/Merrill,
UBSFY was upgraded to Buy from Hold at The Benchmark Company,
KS was upgraded to Buy from Neutral at Dundee,
ORAN was upgraded to Outperform from Mkt Perform at Raymond James;
NFLX was downgraded to Neutral from Buy at UBS,
ARMH was downgraded at Raymond James, Pacific Crest and Exane BNP Paribas,
SMCI was downgraded to Hold from Buy at Stifel;
FDC was initiated with an Overweight at Piper Jaffray,
HUBS was initiated with a Buy and ZEN was initiated with a Hold at Stifel,
MBLY was initiated with a Neutral at JP Morgan
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